HSBC Lifts UK Homebuilders, Says the Downturn is More Than Priced in

HSBC showed love to UK housebuilders on Thursday, upgrading shares of Berkeley Group, Crest Nicholson, Taylor Wimpey, Redrow, Persimmon Bellway, and Barratt Developments in a note. 

While the majority (Crest Nicholson, Taylor Wimpey, Redrow, Persimmon Bellway, and Barratt Developments) was lifted to Buy from Hold, Berkeley was raised to Hold from Reduce, according to TheFly. The firm also adjusted price targets as well…

  • Berkeley’s price target was increased to 4,000p from 3,000p.
  • Crest Nicholson’s was lifted to 270p from 230p.
  • Taylor Wimpey’s moved to 150p from 105p.
  • Redrow’s price target was raised to 670p from 500p.
  • Persimmon’s price target was boosted to 1,550p from 1,410p.
  • Bellway’s was lifted to 2,700p from 2,030p.
  • And Barratt Developments’ was moved to 570p from 390p.

HSBC analysts told investors that the shape of the housing market downturn and possibilities for a “tepid” sector return on invested capital recovery has become more visible. 

Nevertheless, HSBC believes the “clearer downturn” is more than priced into UK homebuilder shares.

Our View: Housing demand is something we looked at recently. Admittedly, we started the article with somewhat of a positive bias on the housing sector based on purely anecdotal evidence…

However, after a bit of digging, it soon became apparent that current demand trends are actually inconclusive. While there are some positive signs, we are waiting for a bit more of an improvement in demand data.